Costco Sells So Much Organic Produce, It Aids Farmers to Grow More

America’s appetite for organic food is so big, the largest seller can’t keep its shelves stocked, so it’s loaning money to farmers to grow more.

Costco recently surpassed Whole Foods as the top seller of organic produce — with four billion in annual sales, but CEO Craig Jelinek says the company can’t get enough to meet customer demand.

So they have launched a pilot program, loaning organic farmers money to buy land and equipment to increase supply of the wholesome fruits and veggies.

The first loan has gone to San Diego, California-based Andrew and Williamson Fresh Produce, or A&W for short. The growers will use the money to buy 1,200 acres and equipment to farm the property. In return, Costco gets to buy anything they grow on the new farm.

A&W is known for growing organic tomatoes, raspberries, blackberries, and strawberries. The land they’ve found has been fallow for years, meaning it’s free from chemicals and can be turned into an organic field immediately.

Costco isn’t alone in offering to aid organic produce suppliers. Whole Foods provides its partners with loans for equipment, and Wegmans works with conventional farmers to transition to organic crops. Mexican restaurant chainChipotle recently an investment of $10 million to help small local farms supply safer meats and vegetables.

But this is believed to be the first time a retailer has loaned money to suppliers for an actual land purchase. If it works, Costco is anxious to expand the program.

While demand for organic food has more than tripled in the last 10 years, the amount of land devoted to organic farming hasn’t kept up with demand. Organic food sales are about five percent of all food purchases, but only one percent of American farmland is devoted to growing organics.

The big-box wholesaler has tried other projects in recent years to guarantee a steady stream of organic food. Costco has its own organic chicken plant in Alabama and bought cattle and contracted to lease organic pastures inNebraska to supply organic beef.